3. Descriptive, normative, prescriptive
Normative question: how should jdm be evaluated?
Descriptive question: how do we make judgments and decisions? prescriptive question: what can we do to improve jdm? e.g training studies

4. Criteria for rationality
Broadly: in the best of the person making the decision; whatever kind of thinking helps people achieve their goals

Four criteria:
Based on the dm’s current assets
Based on the possible consequence of choice
When outcomes are uncertain, likelihood evaluated according to probability
Choice is adaptive within the constraints of the above probabilities and the values and satisfactions associated with each consequence of choice

5. Expected Utility Theory
Concerned with making a tradeoff between the probability of an outcome and its utility
Maximizing expected utility utility is subjective and respects the variety of human goals; represents whatever people want to achieve; value=prob*amount to be won

6. Sunk cost
Throwing good money after bad sunk costs are irrelevant to current decision, instead only incremental costs should influence future decisions
Instruction in sunk costs can reduce the incidence of sunk cost effects but it depends on the nature or the context of the problem

7. Lens mode
The framework is divided into two halves, one representing the psychological events inside the mind of the person making judgment and the other representing events and relationships in the “real world” in which the person is situated

Dawes, Faust, Meefl(1989) Judges perform not as well as the Goldberg Rule

Meta-Analysis: on average actuarial methods were about 10% more accurate than clinical predictions 9. Linear models

10.Heuristics
Mental short cuts used in judgement and decision-making; a rule of thumb that is fast and frugal
Kahneman and Tversky 1974 Science Nobel Prize 2002

11.Availability
Events are judged more likely to the extent that they are vivid or easily recalled
Heuristic: Frequency or probability is estimated according to the ease with which instances are brought to mind
e.g. more stomach cancer deaths than traffic accidents; scanning memory(letter estimates k in 1st or 3re position); Recency and availability; familiarity and availability
Bias: under influence of factors like salience of information, vividness, personal relevance factors that may be unrelated to the…

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